My Crypto Lawyer Sec News EU bans anonymous crypto payments to hosted wallets

In a recent regulatory development, the European Union (EU) has voted to ban cryptocurrency payments to “hosted wallets” using unidentified self-custody crypto wallets. This decision is part of a set of new anti-money laundering laws (AML) in the continent.

The majority of the EU Parliament’s lead commission approved the prohibition on March 19, according to Patrick Breyer’s post.

Notably, Dr. Breyer is a member of the European Parliament for the Deutsch Piraten Partei and one of the two leaders who opposed this approval. Gunnar Beck was the other Parliament member who voted against it, representing the Alternative for Germany (AfD) party.

Voting results of the EU Parliament’s lead committee for AML. Source: Piraten Partei

EU’s new AML: Cash and crypto payments made partially illegal

In particular, the new anti-money laundering law prohibits certain thresholds for cash payments and any anonymous crypto payment. On that note, any cash payment above €10,000 will become illegal, while also anonymous cash payments above €3,000.

The prohibition for payments made in cryptocurrencies will be specific from unidentified self-custody wallets to service providers, as stated in the legislation.

Page 23 of European Parliament’s AML legislation. Source: European Parliament

Furthermore, the approved AML package will apply after three years from its entry into force, according to Dillon Eustace. However, the Ireland law firm expects these laws to become fully operational before the usual enforcement timeline. 

About that, independent journalist L0la L33tz notes that the provision approved by the EU Parliament’s lead committees will likely need to go through further approval processes before coming into effect.

Patrick Breyer’s position on anonymous cash and crypto payments ban

Breyer is skeptical about the effectiveness of fighting crimes through these laws. Moreover, he highlighted how anonymous payments are a fundamental human right, needed to achieve individual financial freedom.

“Generally prohibiting anonymous payments would at best have minimal effects on crime, but it would deprive innocent citizens of their financial freedom. (…) We have a right to pay and donate online without our personal transactions being recorded.”

– Patrick Breyer

From another perspective, the Piraten Partei’s representative pointed out to the negative economic and social effects of prohibiting sovereign payments.

“This EU war on cash will have nasty repercussions! For thousands of years, societies around the world have lived with privacy-protecting cash. With the creeping abolition of cash, there is a threat of negative interest rates and the risk of banks cutting off the money supply at any time. Dependence on banks is increasing at an alarming rate. This kind of financial disenfranchisement must be stopped.”

– Patrick Breyer

What do EU citizens think about AML prohibiting cash and crypto payments?

Historically, European citizens have already shown resistance against cash payment prohibition of any kind. Patrick Breyer described a “great public outcry” in 2017 when the Commission consulted the public about limiting cash payments.

In his words, “More than 90% of responding citizens spoke out against such a step. Respondents considered paying anonymously in cash an “essential personal freedom” and that “Restrictions on payments in cash are ineffective in achieving the potential objectives (fight against criminal activities, terrorism, tax evasion).”

Additionally, the shadow economy expert Friedrich Schneider believes these measures would have “only minimal lowering effects on crime.”


In conclusion, the new anti-money laundering law will effectively prohibit cryptocurrency payments through self-custody wallets to what they describe as “obliged entities.”

Essentially, most crypto networks operate in permissionless networks, where anyone can generate a cryptographic private key, gaining unlimited access to the system. This is one of the core value propositions of cryptocurrencies, as a more accessible, free, and fair approach to finances, which makes no distinction of any kind on its users. 

Experts and freedom advocates consider this recent approval a tough hit against financial freedom and fundamental human rights. On X (formerly Twitter), commentators talk about the resemblance to the dystopic society introduced by George Orwell in the best-seller “1984.”

European citizens and entrepreneurs now wonder if the EU Parliament will have the political strength needed to sustain this approval moving forward.

*Story updated to correct and add relevant information for the readers.

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